General Physics of Columbia seeks approval to buy GPS Technologies

July 07, 1994|By Mark Guidera | Mark Guidera,Sun Staff Writer

General Physics Corp., a Columbia-based company that specializes in training workers at nuclear power plants, is seeking approval to purchase GPS Technologies Inc., a defense and utilities industry contractor also based in Columbia.

The purchase offer, which includes $10 million in cash, stock and stock purchase options, is valued at $30 million to $40 million, depending on stock price fluctuations, company executives said.

The sale must be approved by stockholders of the two publicly held companies.

Ken Crawford, legal counsel for General Physics, said stockholders of the two companies probably will get a mailing in August seeking their vote on the proposed sale.

The companies are awaiting comments about their proposal from the federal Securities and Exchange Commission.

The move is part of General Physics' "larger strategy to diversify into nonutility and nongovernment areas," he said.

If the sale is approved, some staff positions will be consolidated, resulting in some cutbacks at both companies, Mr. Crawford said.

"The interesting thing that we expect from the merger is the cross-fertilization of ideas among the technical personnel," said Mr. Crawford.

General Physics, which in the mid-1980s often was ranked among the 200 best small companies in America by Forbes magazine, has performed a lot of work for the Department of Energy. That includes training people to operate nuclear power plants. The company has simulators which mimic the operations of nuclear power plant control rooms.

The company also wrote maintenance publications for the upkeep of nuclear plants.

General Physics, founded in 1966, contracts with federal agencies, including the U.S. Department of Energy. Its bread and butter for years has been training workers to provide technical and training services to power plants and government facilities.

Its design and engineering work began to diminish in the late 1980s when licensing and construction of nuclear power plants went into a slide.

The company also saw contracts with the Department of Defense begin to shrink in 1993 after several years of growth, according to SEC records.

An expected slowdown in contract work by the Department of Energy, which has proposed eliminating thousands of nuclear weapons production jobs, could have a major impact on General Physics.

Hardest hit by the proposed slowdown is the Savannah River, S.C., nuclear complex. The Clinton administration has decided not to restart an idled reactor there that produced tritium for nuclear warheads. The government has proposed a $210 million cutback in spending at Savannah River.

General Physics has been a key contractor at Savannah River.

The company has 600 employees in Maryland and seven other states. It had revenue of $49 million during the first nine months of 1993.

It had $88 million in revenue in 1986, one of its peak years.

David L. Thames, president and chief operating officer for GPS FTC Technologies, said the merger of the two companies would "create a powerful force in technical training and specialized engineering services for the industrial sector."

GPS Technologies, which is based in the same building on Alexander Bell Drive as its suitor, has 800 employees in Maryland and 10 other states.

The company, founded in 1991, had revenues of $43 million in the first nine months of 1993. About half its work is defense-related.

The company provides engineering, training and analytical services to fossil-fuel power plants and the Department of Defense.

If the deal is approved, GPS would be the second company that General Physics has purchased this year, SEC documents show.

General Physics purchased Cygna Energy Services for $3 million.

Cynga provides design engineering, seismic engineering and safety analysis to the commercial nuclear power industry and the Department of Defense.